Question 1

The equation for computing interest on an interest-bearing note is as follows: Interest = Maturity Value × Interest Rate × Time.

Accepted Answer

A) True 
 B)False

Question 2

On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

Accepted Answer

A)  $0 
B)  $450 
C)  $900 
D)  $1,800 
A)  $0 
B)  $450 
C)  $900 
D)  $1,800

Question 3

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

A)  will increase net income in the period it is collected 
B)  will decrease net income in the period it is collected 
C)  does not affect net income in the period it is collected 
D)  requires a correcting entry for the period in which the account was written off 
A)  will increase net income in the period it is collected 
B)  will decrease net income in the period it is collected 
C)  does not affect net income in the period it is collected 
D)  requires a correcting entry for the period in which the account was written off

Question 4

At the end of a period before adjustment), Allowance for Doubtful Accounts has a credit balance of $5,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000. The amount to be recorded in the adjusting entry for the Bad Debt Expense is $45,000.

Accepted Answer

A) True 
 B)False

Question 5

Journalize the following transactions assume a 360-day year when calculating interest):
Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account.
May 30 The note of March 1 was dishonored.

Accepted Answer

Mar. 1 Notes receivable, Batso

Question 6

Match each description to the appropriate term a-i).
-Term for selling receivables

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring 
A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Question 7

At the end of the current year, Accounts Receivable has a balance of $90,000; Allowance for Doubtful Accounts has a credit balance of $850; and sales for the year total $300,000. Bad debt expense is estimated at 2.5% of sales.
Determine a) the amount of the adjusting entry for uncollectible accounts; b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and c) the net realizable value of accounts receivable.

Accepted Answer

The answer of At the end of the current year,...

Question 8

Match each description to the appropriate term a-h).
-The amount due that must be paid at the due date of a note receivable

Accepted Answer

A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate 
A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate

Question 9

Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?

Accepted Answer

A)  debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600 
B)  debit Allowance for Doubtful Accounts, $43,200; credit Bad Debt Expense, $43,200 
C)  debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200 
D)  debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600 
A)  debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600 
B)  debit Allowance for Doubtful Accounts, $43,200; credit Bad Debt Expense, $43,200 
C)  debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200 
D)  debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600

Question 10

Allowance for Doubtful Accounts is a liability account.

Accepted Answer

A) True 
 B)False

Question 11

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. Assume a 360-day year when calculating interest.)
a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entry to record the receipt of the payment of the note at maturity.

Accepted Answer

The answer of Lone Star Company received a 90-day, 6%...

Question 12

Match each description to the appropriate term a-i).
-All money claims against other entities

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring 
A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Question 13

The number of days' sales in receivables

Accepted Answer

A)  is an estimate of the length of time the receivables have been outstanding 
B)  measures the number of times the receivables turn over each year 
C)  is net credit sales divided by average receivables 
D)  is not meaningful and therefore is not used 
A)  is an estimate of the length of time the receivables have been outstanding 
B)  measures the number of times the receivables turn over each year 
C)  is net credit sales divided by average receivables 
D)  is not meaningful and therefore is not used

Question 14

Small companies can use either the direct write-off method or the allowance method.

Accepted Answer

A) True 
 B)False

Question 15

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 16

If collection of another receivable is expected beyond one year, it is classified as an)

Accepted Answer

A)  other receivable under noncurrent assets 
B)  other receivable under current assets 
C)  investment under current assets 
D)  investment under noncurrent assets 
A)  other receivable under noncurrent assets 
B)  other receivable under current assets 
C)  investment under current assets 
D)  investment under noncurrent assets

Question 17

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Accepted Answer

A)  credit to Notes Receivable for $20,300 
B)  debit to Interest Receivable for $300 
C)  credit to Interest Revenue for $300 
D)  debit to Notes Receivable for $20,000 
A)  credit to Notes Receivable for $20,300 
B)  debit to Interest Receivable for $300 
C)  credit to Interest Revenue for $300 
D)  debit to Notes Receivable for $20,000

Question 18

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?

Accepted Answer

A)  debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600 
B)  debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800 
C)  debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800 
D)  debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600 
A)  debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600 
B)  debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800 
C)  debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800 
D)  debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600

Question 19

Match each description to the appropriate term a-h).
-A formal, written instrument of credit that represents amounts due from customers

Accepted Answer

A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate 
A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate

Question 20

Match each description to the appropriate term a-i).
-Records bad debt expense only when a specific customer's account is deemed worthless

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring 
A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Exam 8: Receivables

The equation for computing interest on an interest-bearing note is as follows: Interest = Maturity Value × Interest Rate × Time.

On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Journalize the following transactions assume a 360-day year when calculating interest): Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account. May 30 The note of March 1 was dishonored.

Match each description to the appropriate term a-i). -Term for selling receivables

Match each description to the appropriate term a-h). -The amount due that must be paid at the due date of a note receivable

Allowance for Doubtful Accounts is a liability account.

Match each description to the appropriate term a-i). -All money claims against other entities

The number of days' sales in receivables

Small companies can use either the direct write-off method or the allowance method.

The direct write-off method records bad debt expense in the year the specific account receivable is determined to be uncollectible.

If collection of another receivable is expected beyond one year, it is classified as an)

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?

Match each description to the appropriate term a-h). -A formal, written instrument of credit that represents amounts due from customers

Match each description to the appropriate term a-i). -Records bad debt expense only when a specific customer's account is deemed worthless

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Filters